In his State of the State Address Tuesday night Governor Dan McKee rolled out a nearly $100 million tax relief plan to support Rhode Island families and businesses as part of his FY24 budget proposal.
“Rhode Island families and businesses are ready for more tax relief and our Administration is ready to deliver,” said Governor Dan McKee. “We know that Rhode Islanders are still dealing with rising prices at the grocery store and the gas pump. And we know that families have been forced to make difficult financial decisions because their dollar isn’t stretching as far as it used to. That’s why the budget I’ll be submitting to the General Assembly proposes more ways to help Rhode Islanders navigate these inflationary pressures, while making our state a more competitive place to do business.”
“Rhode Island’s small businesses and the families who rely on them deserve a break. By reducing the burden on our state’s smallest businesses, offering rebates for energy taxes, and holding the line on workers compensation premiums, this budget proposal will make our state a better place to start a business and to shop local,” said Lt. Governor Sabina Matos. “Let’s get this plan into law and put money back in Rhode Islanders’ pockets.”
The Governor’s tax relief plan for families and businesses includes:
Reducing the state sales tax: Incrementally reducing the state’s sales tax starting this year with a reduction from 7% to 6.85% resulting in a total savings of $35 million annually. The State’s sales tax was increased during the banking crisis of the 1990s with a promise that it would be later reduced – that promise was never kept.
Reducing the corporate minimum tax: Lowering the corporate minimum tax from $400 to $375. This tax most negatively impacts Rhode Island’s smallest businesses.
Stopping the gas tax increase: Providing relief at the gas pump by stopping the scheduled 3-cent increase on the gas tax that is required by law to go into effect on July 1. This proposal will provide nearly $25 million in tax relief over the next two years.
Delivering energy bill rebates: Providing Rhode Islanders with a rebate for the 4% gross receipts tax on their electric bills and 3% gross receipts tax on their natural gas bills. This will result in $35 million in total relief.
Eliminating the litter tax for businesses: Ending the litter tax which is paid by local businesses. Under the current structure, the nearly $1 million collected from this tax are not directed to support litter or environmental initiatives. In its place, the Governor is proposing targeted funding for the Keep Rhody Litter Free initiative.
Workers Comp: Directing more than $4 million into the Workers Compensation Fund to prevent an increase in the premiums paid by Rhode Island businesses.
Truck trade-in: Exempting from the sales and use tax the trade-in value of trucks with a gross weight of 14,000 pounds or less to mirror exemptions for passenger cars and motorcycles. The exemption for trucks is projected to save individuals about $3.7 million next fiscal year.
The Governor’s FY24 plan builds on the $200 million in tax relief that the McKee Administration and the General Assembly delivered last year:
Sending child tax rebates to over 40,000 parents
Expediting the car tax phaseout
Ending the tax on military services pensions for Rhode Island Veterans
Approving additional property tax relief to Rhode Island seniors and adults with disabilities